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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: Tundra who wrote (596)	10/23/1998 11:40:00 AM
From: Thomas M.	Respond to of 2794

pathfinder.com Where's the Dough? Follow the money" is one of the oldest saws in journalism. But when you try to do that with Long-Term Capital, you get more questions than answers. Okay: John Meriwether's merry men were able to leverage their $4.7 billion in capital up to more than $125 billion--most of which, we know, vaporized in mid-September. But add up the heart-rending stories of hundred-million-dollar losses and exposures and it doesn't come close to $125 billion! Not even the tip of the iceberg! Merrill reported a $1.4 billion exposure (almost completely collateralized, says Merrill, as are most of those that follow); ING Barings, $840 million; UBS, $685 million; Italy's central bank, $250 million; Dresdner, $143 million; Sumitomo $100 million, plus one- and two-digit million-dollar losses from the smaller fry. Add it all up, and you don't even get to $3.5 billion. Meaning there's still $120 billion-plus lurking out there on someone's books. Hello!!!! Loose Change Speaking of Long-Term Capital, I hear some people on the Street are furious at Bear Stearns for not ponying up for the LTCM rescue package. The Bear says it never invests in hedge funds and that it would be a conflict of interest to do so, given that it clears trades for the Hedge Fund From Hell ... Here's a new phrase to describe the investor psychology that's responsible for today's sicko market conditions (from Rick Deutsch of Merrill's fixed-income desk in London): "irrational unexuberance." I love it!...